THE PESO on Friday closed at its weakest level against the US
dollar in nearly two months, weighed down by some corporate demand and rising
political concerns ahead of the May 2004 elections, dealers said.

Dealers said the dollar outflows might have something to do
with a purchase deal involving Globe Telecom Inc.'s shares.

The peso closed at 55.33 to the dollar after trading at a
55.20-55.40 range on volume of 145.20 million dollars. It closed at 55.240 on
Thursday.

At the Philippine Stock Exchange, Globe Telecom's 12 million
shares worth a total of 8.16 billion pesos were sold in several block
transactions at 680 pesos each.

Early this week, Globe said it would close its deal to
repurchase 12 million of its shares from Deutsche Telekom AG unit DeTeAsia
Holdings GmbH Friday. The shares Globe bought back account for 7.9 percent of
its total outstanding common shares.

Globe major shareholder Ayala Corp. will close a separate
deal with DeTeAsia Holdings on the purchase of the latter's 10.03 million shares
in Globe on October 30.

"Political uncertainties have also encouraged some
market players to continue covering short positions ahead of the weekend, while
those with month-end dollar requirements are buying days ahead," a
commercial bank dealer said.

The dealer said the market had been wary about the prospects
of actor Fernando Poe Jr. as a presidential candidate, as he is seen as a strong
contender due to his mass appeal, notwithstanding his lack of experience in
public service.

The dealer also believes the political environment has become
more volatile following the impeachment of Supreme Court Chief Justice Hilario
Davide Jr. by the House of Representatives, a move led by mostly members of the
opposition block. The complaint stems from his alleged misuse of public funds.

Security concerns also weighed on the peso, with President
Gloria Macapagal-Arroyo declaring the Jemaah Islamiyah (JI) the country's top
security threat with a capability to sow far-reaching terror attacks, replacing
local insurgent groups.

The statement came a day after Macapagal announced the arrest
of Indonesian Taufek Refke, who is allegedly the JI's number two man in the
south of the country.

Dealers said they did not see the central bank in the market.
At around noon, the central bank said it was not planning to intervene in
Friday's trading.

Central bank deputy governor Amado Tetangco Jr. attributed
the peso's decline to higher dollar demand from companies rushing to complete
month-end financing requirements, as well as to some short covering among banks.

"The political noise is not helping... It has been a
cautious market," he added.

Still, the central bank remains optimistic the currency will
settle at 54-54.50 against the dollar at the end of the year, as it expects
strong dollar remittances from overseas Filipino workers during Christmas
holidays.

"The market may test the 55.50 level next week and, if
that is breached, we see a free fall and a possible test of the peso's record
low (of 55.750)," the dealer said.